In order to obtain a licence, cab-aggregators have to replace their present efficient technology with an outdated one. The requirements to obtain the licence are archaic and simply untenable.

In yet another blow to cab aggregator companies in Karnataka, the State Transport Department issued a statement asking cab aggregator companies which have not obtained the necessary licences to stop operations immediately. “Web-based aggregators had to obtain licences to operate cabs and taxis. But many aggregator companies have not obtained licences, but are operating such cabs. This is a gross violation under sec-93 r/w 193 of the Motor Vehicles Act. Hence, companies which have not obtained licences from the concerned authority should stop operations with immediate effect otherwise strict action will be taken against such operators,” the statement said.

It does feel a bit retrograde to ask companies to stop functioning for not having obtained the appropriate licence. It does remind one of the pre-1991 days. However, the immediate counterbalancing reaction would be to wonder why would the cab companies refuse to obtain a licence. What exactly is preventing them from getting a licence, which can keep them in business in their largest market – Bangalore. So, I wanted to know what does it entail to obtain a licence to continue as a cab aggregator.

This particular section (sec-93 r/w 193) of the Motor Vehicles Act specifies that “No person shall engage himself as an agent or a canvasser, in the sale of tickets for travel by public service vehicles or in otherwise soliciting customers for such vehicles, without a licence from the proper authorities”. This bit seems more relevant for KSRTC ticketing agents and not on-demand cab aggregators operating over a mobile app.

For further clarity, one needs to look at the The Karnataka on-demand Transportation Technology Aggregators Rules, 20 I 6, which was released on 2nd April 2016. It starts off by quoting the original section 93 that a licence is required to operate as a cab aggregator and then goes on to specify the requirements for obtaining the licence.

The requirements are specified for the aggregator company, the driver, and the vehicle. The company has to pay a licensing fee of Rs.50,000; keep a security deposit of Rs.2,50,000; have a minimum of 100 cabs in their fleet, has facilities for monitoring the vehicles via GPS, etc. The driver should have a driver’s licence, minimum driving experience of two years, be a resident of Karnataka for a minimum period of two years and have a working knowledge of Kannada among other things.

All of these requirements seems fairly reasonable and should not act as an impediment for Ola or Uber to obtain a licence. It also seems that the regulators have understood how cab aggregators work, until of course, they get to the specification for the vehicle. When describing the requirements of the vehicles, the Act goes back to the classic 1970s Licensing Raj days. All cabs should be fitted with an yellow coloured display board with words “Taxi” visible both from the front and the rear. The board shall be capable of being illuminated during the night hours. The driver’s licence and photo should be displayed clearly in the vehicle. As of now, the app takes care of that.

The part of the Act that betrays the fact that the regulators temporarily time travelled to the 1970s is the demand for every vehicle to have a meter which displays the fare along with a printer that can provide a printed copy of the final amount to be paid along with the breakdown of the fare. While specifying this, they truly embraced red-tapism, in all its glory, and specified the font size for the bill to be printed in, print width, print speed, resolution, among other things. They have also given extremely detailed specifications of the GPS/GPRS capable vehicle tracking unit (including temperature range and humidity of the device).

Some of the specifications for vehicles operating under cab-aggregators.

Asking an app-based cab aggregator company to install a bill printing device in the car, a large display monitor that shows the route, fare, and other details, to have a taxi sign on top, etc seems to be retrospective in nature, since all of this is done more efficiently by the respective apps. By demanding Uber and Ola to obtain licences by adhering to these specifications is forcing them to replace their more efficient technology with an outdated one. By doing so, the regulators are only betraying their ignorance of how a cab-aggregator functions. I would strongly urge them to download the Ola app today, take a ride, understand how it works and then come up with regulations that wouldn’t throttle the businesses.

Anupam Manur is a Policy Analyst at the Takshashila Institution.

(Part I was regarding limiting Surge Pricing and my article on that can be found here).

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Some practical and impractical applications and implications of blockchain.

Photo Credits: Flickr

Blockchains are useful when you need to maintain an immutable history of transactions in which both parties do not trust each other as well as the intermediary. It is also useful in maintaining the anonymity of the participants in a transaction. Given these characteristics what does it mean for countries and societies at different levels of development and organization?

Close to dysfunctional government

Honduras recently has an incident where the top level bureaucrats went into the system allocated whole swaths of land to themselves. Such incidents do not inspire confidence in the authority which is supposed to safe guard people’s land rights and resolve dispute. A solution using blockchain to maintain land records was proposed to solve this problem.

Fiscally irresponsible government

When Argentina faced run-away inflation in 1989 people lost trust in the value of the currency. A currency such as bitcoin which is based on the blockchain technology can be a recourse for people in such a situation as no country can alter the supply of a digital currency forcefully.

Societies with irresponsible media

News based on photographs and videos taken on mobile phones are increasing becoming common on social media as well as main stream media. Unfortunately, so is their tampering and obfuscation. A system where all media is put on a blockchain before it is shared will ensure that it cannot be edited or deleted later on. Thus there will always be a permanent link to the that piece of information which can be visited in case of confusion or controversy.

Societies with poor banking services

Since trust is in distributed in the network peer-to-peer money transfers can be enabled with the inter-mediation by banks. The commission for mining will still have to be paid but the transaction can be recorded on distributed ledger and no one will be able to contest it.

Societies lacking unique identity documents

Services such as onename or keybase use blockchain technology to authenticate users uniquely. Other features like bio-metric information or attributes like address, birthdate, etc. can also be added on top of this.

Societies with authoritarian governments

The transactions on a blockchain are anonymous and thus difficult to track. They can be used for conducting transactions when the parties involved do not want to reveal themselves. Though the privacy provided is not as strong as it seems and there have been many instances when actual people behind the pseudonyms and keys have been identified.

Societies where stock exchanges do not function properly

Since a trusted intermediary is not needed blockchain can be used to trade digital assets or assets which can be uniquely represented in the digital form. This can also be applied to betting markets.

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The recent terror attack at Pathankot has raised a concern over the imminent drug-terror cartel in the region. There is a likelihood of arms and ammunitions pushed across the international border before the terror strike. The terrorist have entered the base on 1 January 2016 thereafter followed by an intense combing operation. The attack on Indian Consulate at Mazar-i-Sharif in Afghanistan preceded the Pathankot air base attack and both these attacks pointedly confirm the hand of JeM (Jaish-e-Mohammed). Is the Border Security Force (BSF) not fully operational in the region as Jammu and Kashmir is something that has to be seen. Is the emerging triangular drug-teror-money triad the probable reason for this lapse.

There is a flourishing narcotic network between Pakistan and Punjab. Lots of speculations on alleged narcotic trade across the border to have played hand and glove in the attack. Often drugs move at ease across the borders and then it is simply transported to the mainland. Despite Government measures to safeguard the border , this area continues to remain primarily a conduit for drug traffickers, smuggling drugs and arms into India. There is huge money laundering and lobbying mafia which operates that could fuel the terror networks across the border.The border though heavily guarded continues to be a major apprehension for the Indian Government.

The drug-terror duality is growing menace and often terror groups tap this source as it is the most vulnerable and lucrative source.The combination of money traded against weapons could be a strong reason for the breach of security , thus synergising the drug-money-weapons combination. The region is famous for drug infiltration and notorious for heroin. Pathankot also has drug-deaddiction centre which could further testify this strong connections. Sprawling houses, multi-storeyed building dominate the area and could further act as a storage for the drugs before it reaches the market. There is a noticeable youth population in Pathankot, who were possibly used in this racket. The attackers probably could have used this medium to transport heavy weapons across the borders.

There are challenges that India faces across the borders despite heavy patrolling and border fencining. Due to geographical features there is no clear distinction or uniformity in this border creation.The 460 km long international border in Punjab is impenetrable and guarded. The recent terror attack at the Pathankot air base has raised major concerns on the border safety. There have been attempts made by the militant outfits to cross the border, a noticeable one was the gunning down of a militant who attempted to cross the border outpost in KMS Wala area near Ferozpur Sector of India’s Punjab on 5, September 2014. This confirms the fact that there are has been sporadic incidents of militants movement across the border.

The weapons used in the attack confirms that armaments could have been transferred from Pakistan. There is a possible involvement of several groups in this terror connection. The absence of latest technology to counter attacks could be one strong contending factors leading to security lapse. Several question remains unanswered, how efficient is the continuous and controlled operation across the border and the level of preparedness in handling such terror strikes.

Priya Suresh is a research scholar with Takshashila Institution . She tweets @priyamanassa.

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Unionisation of the IT workforce can potentially cause the Indian IT sector to fall behind other emerging markets – Varun Ramachandra and Gopal Devanahalli

In December 2014, Tata Consulting Services, India’s largest Information Technology (IT) services company, laid off 3,000 employees citing poor performance. This has triggered debates about unionisation in India’s IT & BPM industry. In fact, IT employees were seen protesting the actions of the TCS, a phenomenon not characteristic of an industry that currently employs 3.3 million people.

The Trade Unions Act, 1926, defines a ‘trade union’ as “any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers.”

It can be said that these regulations are intended to achieve the following objectives:

Fair wages for employees.

Good working and living conditions.

A reasonable level of job security for union members.

Although they are created with the right objectives, trade unions have a checkered history of taking unyielding stances that result in the loss of valuable time and resources. Moreover, average wages in the IT and Business Process Management (BPM) industries are quite high, and employers also offer excellent working and living conditions. Retrenching employees is not ideal but most, if not all, IT employers offer excellent severance packages when they let go of their employees. Given that these industries reward their employees fairly well during good times, it is unsurprising that they move towards austerity when times get tough. The case for unionisation in the IT industry is, therefore, weak.

Image credit: Pavan Srinath

In its short history in India, the IT industry has seen high growth that has added people, primarily college graduates, into the workforce at a rapid pace (10% Cumulative Average Growth Rate). This growth has made it is easy for employees to switch jobs, and, contrary to popular perception, the demand for top quality experienced employees is much higher than the supply. This has resulted in firms coming up with different ways to retain employees – loyalty bonuses, flexible timings, relatively easy transfers, high quality training imparted ,extended ‘notice’ period in employee contracts(in some cases as high as 3 months).

With the advancement of technology, the number of employees required to perform a task has come down in all industries. Consequently, the growth of a firm’s workforce may not keep pace with the growth of its revenues, especially in the IT industry. For example, with the advent of Amazon’s web-services, the need to maintain physical servers has come down. In this context, the narrative of saving jobs is a strong and compelling one. But there is no conclusive evidence to show that technology will not continue to be a key lever for companies across the world to transform themselves. These transformations might occur in ways that are completely different from current methods and Indian IT firms therefore, must be highly adaptable to new technologies.

Source: NASSCOM

Indian IT firms also largely cater to clients working in other parts of the world. A majority of this work requires the management of the core technology systems of clients in the IT industry and the core operations in the BPM industry. In this construct, high organizational efficiency is a pre-requisite for the success of individual firms and the industries as a whole. India is still considered as the top destination for the outsourcing of IT work as it has a skilled workforce and relatively low operational costs. However, it is easy for Indian firms to lose this competitive edge as there are several low cost countries like Philippines and China that are building their IT & BPM capabilities.

The unionisation of the workforce could potentially cause the Indian IT sector to fall behind such countries. It could also lead to a further loss of jobs because it will not just create ‘interest-groups’— a select few who stand to gain disproportionately — but also hamper the efficiency of a sector that is fast evolving. With unionisation, there is a risk of creating situations where the incentives for employees to acquire new skills cease to exist and it becomes exceedingly difficult for firms to retrench employees rendered redundant by the advent of new technologies.

In an industry that already pays relatively higher wages and provides employees with good working conditions, there is a high aspirational value attached to IT jobs by a majority of the population. Unionisation will not only jeopardise the chances of several new aspirants entering the workforce, it risks creating an environment where skills are not given importance.Source: Respective quarterly statements Oct-Dec-2014

That being said, employees in the IT sector certainly have some genuine concerns. However, these can be redressed, by implementing one or more of the following recommendations and not necessarily by creating unions:

Actively encourage and reward skills upgradation. Currently, most of these activities are viewed as a mandatory requirement for a promotion into a managerial position that expects fungible people management skills as opposed to technical skills.

Ensure that the excellent working conditions are maintained.

Ensure proper severance schemes in the event of an employee’s contract being terminated. Currently, several firms expect new employees to sign contracts requiring them to pay a certain amount if they wish to leave the firm before the fixed period. Though such bonds are not always legally tenable, it is natural for employees to expect a similar reciprocal treatment if their employer terminates their contracts.

Enable Human Resources departments to deal with complex people issues rather than merely reducing them to recruitment engines

These ideas are not necessarily a comprehensive list of recommendations, but they provide a broad framework to address the valid concerns raised.

Gopal Devanahalli is a senior VP at Manipal Healthcare and is an alumni of the Takshashila Institution. He tweets at gops85

Varun Ramachandra is a policy analyst at the Takshashila Institution and tweets at _quale

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The Indian media is awash with news about technology startups and the rise of entrepreneurial activity. However, the hallmark of successful startup ecosystem is the number of other successful startups that spawn out of the existing ones. Individuals who work in firms that successfully exploit new market opportunities are usually innovators or have the potential to innovate. These individuals are characterised by a mindset that encourages new ideas, the taking of risks, and a penchant for success. The success of US startups can be traced to the creation of such an ecosystem — the ease of finding quality talent and the network effect of a tight knit ecosystem have positively impacted everyone involved.

India is on the verge of creating such an eco-sytem, but there is a lack of understanding, especially, among smaller startups about governments and its role in building such an environment. While there is a need to simplify regulatory aspects, startups themselves must start treating governments and policy makers as active stakeholders and not as mythical demagogues. Governments always play a catching up role in the technology curve, for a startup’s credo is to innovate, while the government’s primary motto is to provide basic public services and the two may not always overlap.

Quite often, firms merely focus on obtaining tax breaks or sops; instead, startups must engage with the government and prod for better civic amenities, push for reforms that enable ease of doing business and enact laws that are transparent. This is especially true for companies that wish to ‘disrupt’ the space they are working in, for a disruptive idea often operates within a gray area of existing law, and active engagement with lawmakers can help assuage regulatory chasms. Not doing this can lead to unnecessary hurdles in business and operations. It is understandable that lean startups cannot devote precious human resource to engage with the government, but the problem can be addressed by collective action. Several associations in India have played a pivotal role in shaping the IT-BPM industries’ footprint in India. Startups must actively engage with the existing organisations, or form new industry bodies that work in conjunction with the existing ones to engage in public affairs

As a thought experiment, the author would like to draw attention to a cultural characteristic. Many Indian startups are successful in B2B business models. However, there are very few successful B2C businesses, where the consumer pays for a service like an app, or a software that aids productivity(The exception to this are e-commerce sites). The author contends that this is a cultural challenge. Basic services in India like water, electricity, roads, fuel etc are highly subsidised or inappropriately priced and the consumer is not used to paying for these services, in such a scenario it is highly unlikely for a consumer to pay for individual technology services. It is in this context that an engagement between entrepreneurs and public affairs assumes a significant role.

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This is a community blog by the public policy students, alumni, scholars and staff of the Takshashila Institution. The opinions are those of the respective authors and do not represent the position of the editors or that of the Takshashila Institution.